Question

Product costs estimated using the sequential method of cost allocation

A. the first step is to develop a reciprocal cost equation.
B. the first step is to allocate the service department costs to the production departments.
C. one service department is chosen to allocate costs first.
D. service department costs are allocated directly to the production departments.

Answer 1

The correct answer is letter "C": one service department is chosen to allocate costs first.

Step-by-step explanation:

The sequential method of cost allocation or the allocation method is used to place the cost of service departments to other departments in the same firm. The first department chosen does not receive an allocation from the other departments. Then, the cost of each department is distributed one by one.